Earlier this year, we co-led The Food Lab’s $4.5M pre-seed round with Shorooq Partners and 4DX Ventures. Nuwa’s decision to invest in the company and embark on this journey with them was premised upon two important factors: our deep conviction in the founding team, and our recognition that Egypt’s ghost kitchen market was both large and operationally complex (giving it an inherent moat). The following are some high-level qualitative and quantitative points that helped guide our investment decision.
- The suburbanization of Egyptian major cities is leaving many consumers out of their favorite restaurants’ geographic reach, leading to variety loss for consumers and economic costs for restaurants
1) Launching a new location is financially and operationally expensive for restaurants
2) Egypt’s high population growth coupled with high levels of de-urbanization make scaling a brand across the country unfeasible for many
- Full-stack Kitchen-as-a-Service (KaaS) providers offer restaurants a free, easy way to expand their geographic footprint, thereby increasing their reach and revenue. New concepts can launch within 10 days.
- The Food Lab’s team have proven their operational capabilities by successfully launching and scaling multiple kitchens with 50+ brands, and have ambitious yet feasible plans to scale their business throughout the country and the MEA region, becoming within reach of every person in all major Egyptian cities
1) Bootstrapped since launch in 2020, The Food Lab has grown 60x since inception
2) Each of the founders has prior experience launching and scaling other operations (including advertising marketplaces, technology acquisitions, food-brand building, logistics and more)
- Deep trust, belief and conviction in Ahmed, Kareem and Wesam. The founders have local expertise in finance, operations and F&B, that other regional players simply do not have. Penetrating the Egyptian market is a supreme operation challenge that The Food Lab have already proven themselves capable of conquering
- Strong technical team gives them the ability to collect, transform and translate significant amounts of data, leading to key insights such as ingredient preferences, ultimately allowing them to fill cuisine gaps that consumers may not be aware of
- The Food Lab’s virtual brand consultant, a data-centric dashboard powered by machine-learning, provides restaurants with recommendations for their brands across operations, finance, menu reengineering, marketing, customers, supplier analysis, and more.
- The Egyptian target market alone is large and under penetrated by KaaS providers; the total F&B market is ~$17B, coming from 40k+ restaurants
1) Orders with The Food Lab have grown 10x through 2021 with 175,000+ customers.
2) Significant room for TAM expansion as The Food Lab expands to other countries in the MEA region
3) Significant room for monthly ARPU expansion as The Food Lab offers customers more brands to order from
- The addition of first-party brands to fill cuisine gaps allows them to further increase their (already strong) margins
This oped was written by Ghassan Noursi and Hossein Alsharif.